Onkar on CNBC
posted by Amit Ghate at 9:51 AM
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Commentary from a pro-reason, pro-egoism, pro-capitalism perspective
Tuesday, September 04, 2007
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1 Comments:
I enjoyed his comments. The contrast between Onkar, who challenged the entire concept of the Fed, and the other panelists, all of whom took for granted that the Fed should exist, was dramatic.
The other panelists clearly took Onkar's position as self-evidently false. However, the fact that he was there to state it should make people think, perhaps for the first time, about whether the Fed should exist.
As for the economic point made by the panelists, all of them asserted that economic volatility was greater prior to 1913 (the year the Federal Reserve Bank was established), this is simply untrue. Never in the pre-1913 era was there an economic depression as large as the Great Depression of the 1930s. Also, never was there an inflationary spiral as dramatic as the inflation of the 1970s. Both of these events were caused by the Federal Reserve mis-management of the nation's money and credit.
In terms of both depressions and inflation, volatility has been greater since the Fed was established in 1913.
Of course, the pre-1913 era was not the best standard to judge an economy without a Fed. There was still widespread government intervention in financial markets. For example, the period between the Civil War and 1913 was characterized by a nationalized currency that was inflexible, by law, due to the mandate that only U.S. government bonds could serve as backing. It was hardly a period of laissez faire where currencies are strictly issued by private banks, free of government controls.
Going back further, during the three decades prior to the Civil War, there were private bank currencies. However, state anti-branch banking laws caused a multiplicity of banks to exist, and a needless variety of currencies to be put into circulation. This would not happen under national banking in a laissez faire world.
Despite those imperfections of the 1800s, the economy still exhibited greater stability then than it did during much of the period since 1913.
Of course, these are points that are impossible to bring to the public's attention when allowed only a few sound-bites on a television news broadcast. Given that constraint, Onkar did well. Just being able to defy the gospel on such an issue, on national television, is extremely worthwile.
As more voices like Onkhar's are heard in the media, more people will question statist institutions such as the Federal Reserve Bank.
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